Selling a dump truck and aggregate hauling company in Canada

An owner who has decided to sell a hauling company has two clocks running. One is the construction season, when trucks are working and a buyer can see them earn. The other is the time it takes to clean up whatever a buyer will find. Preparation includes documents: safety records, equipment ownership, contracts and customer history. The sale itself also has a confidentiality problem, because the people who call your trucks can learn that you are selling before you have decided how to tell them. This guide follows the sequence from preparation to closing, for an owner who has already decided.

Start with the safety record

Get the carrier’s record from the body that issues it, so you know what it shows before any buyer does. In Ontario that is the CVOR abstract, which the Ontario government describes as a summary of a carrier’s or driver’s safety performance, including collisions, convictions and inspections. Order your own early, so you see what a buyer will see. If something is wrong, you have time to address it, and you will not be explaining it for the first time across a table. The same Ontario page says trucks plated in another Canadian province or territory need a safety certificate from that province or territory instead, so ask the regulator that issued your registration what it releases to a buyer.

Decide what is being sold

The structure changes what moves. Treadstone Law, an Ontario firm, explains that in a share purchase the corporation keeps its contracts, leases and licences, while in an asset purchase the buyer acquires specific assets rather than the company itself, and licences and permits often require the regulator to be notified, or to give approval, when ownership changes. In Ontario, the CVOR page describes the operator as the person or corporation responsible for operating the commercial vehicle, so ask the regulator what a change of owner or officers triggers before you promise a buyer a clean handover. The Ontario government’s CVOR page says the Ministry of Transportation must be notified immediately about CVOR changes such as changes in corporate officers.

Tidy the tax and account closures

The Canada Revenue Agency says that if you sell a business with employees you must close the payroll account, and if it has a GST/HST account you must contact your tax services office to close the account. The CRA also says that, depending on your situation, you may have a recapture or a terminal loss of capital cost allowance on the sale of your assets, which is worth asking about in a business with many trucks. It says the joint GST/HST election cannot be made if you sell only one or more assets of your business, or if you are a registrant and the purchaser is not. Raise all of this with your accountant before you set a price, not after. The CRA notes that in some cases a sales agreement sets out a price for each asset, so ask your accountant how the split of the price across the trucks and other assets affects the tax result.

Introduce the buyer carefully

The relationship with each pit, quarry and paving contractor is a large part of what you are selling, and a poorly timed announcement could put it at risk. Agree with the buyer in writing when each introduction happens and who makes it. BDC notes that a change in business ownership can be disruptive for employees, customers and suppliers, and that, depending on a listing site’s confidentiality procedures, word could get out to them that you are selling, so decide who knows what and when. Keep drivers informed in a way that does not unsettle them, because a crew that leaves mid-season takes the capacity with it. Owner-operators who run under your authority need the same attention, since they decide whether to stay with the company after the sale.

Expect the buyer’s document list

Prepare the documents that answer a buyer’s diligence questions: equipment lists with serial numbers, proof of ownership or lender payout statements, insurance and claims history, driver files, customer and contract summaries, and the registrations and prequalifications the company holds. Gathering these before you list means you are not assembling them under a buyer’s deadline. Ask your lawyer which of these documents should be shared before a confidentiality agreement is signed and which only after. Driver files and customer pricing are sensitive; ask your lawyer when, and whether, a buyer who is also a competitor should see them. The sections of due diligence a buyer cares about are covered in the glossary.

• Order your carrier safety abstract early and resolve anything fixable before listing
• Confirm with the regulator what a sale or change of officers requires, and by when
• Decide with your accountant whether you are selling shares or assets, and plan the tax closures that follow
• Agree in writing how and when the buyer meets your pit, quarry and paving customers
• Assemble equipment ownership and lender payout documents before the first buyer asks